Onity Group Inc.

Hello and welcome everyone, joining today's Onity Group's second quarter earnings and business update conference call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. To register to ask a question at any time, please press star 1 on your telephone keypad. Please note, this will be recorded. We are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to Valerie Haertel, Vice President, Investor Relations. Please go ahead.

Good morning and welcome to Onity Group's second quarter 2026 earnings call. Please note that our earnings release and presentation are available on our website at onitygroup.com. Speaking on the call will be Chair, President, and Chief Executive Officer, Glen Messina, and Chief Financial Officer, Sean O'Neil. As a reminder, our comments today may contain forward-looking statements made pursuant to the safe harbor provisions of the federal securities laws. These statements, which speak only as of the date they are made, may be identified by reference to a future period or by use of forward-looking terminology and address matters involving assumptions, Thank you for joining us. Non-GAAP measures should be viewed in addition to and not as an alternative for the company's reported GAAP results. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures and management's reasons for including them may be found in the press release and the appendix to the investor presentation. We made changes to our non-GAAP methodology this quarter and encourage you to review the presentation's notes regarding non-GAAP financial measures. Now, I will turn the call over to Glen Messina.

Thanks, Valerie. Good morning, and thank you for joining our call. We're looking forward to sharing our results for the second quarter, as well as reviewing our strategy and financial objectives to deliver long-term value for our shareholders. Let's get started on slide three. In the second quarter, our sound strategy and strong operating fundamentals delivered double-digit year-over-year revenue growth and record origination volume. Our balanced business performed well, with rising interest rates driving increased adjusted pre-tax income and servicing, offsetting declining adjusted pre-tax income and origination. For a strategy report, we've completed the reverse asset sales to Finance of America, as well as transferred most of the legacies of servicing back to Rhythm. We believe these transactions simplify the business, improve profitability and focus, and increase strategic flexibility. The second quarter net loss includes roughly $33 million of pre-tax costs related to these transactions, as well as market-driven unfavorable asset fair value adjustments. Finally, considering persistent geopolitical instability, inflation, and market volatility, We expect our full year of 2026 adjusted ROE to be at the low end of our guidance range. Let's turn to slide four to review a few key financial highlights. We again delivered double-digit year-over-year revenue when servicing UPV growth, as well as record origination volume with improved revenue margins versus last quarter. Total servicing additions were up 2.8 times versus prior year, driven by our strong originations in subservicing additions, which exceeded our first half expectations. Consumer Direct continued to perform well, delivering funded volume up about three times over last year with improved refinance recapture rates. Our net loss includes $9 million of pre-tax costs related to the reverse asset sale and legacy subservicing transfer, as well as $24 million of pre-tax assets fair value change of which about half is related to reverse. Sean will provide more details on these costs later in the presentation. Origination adjusted pre-tax income increased over three times versus last year, reflecting lower interest rates driving higher industry volume levels as well as improved execution. Servicing adjusted pre-tax income decreased over 60% versus last year, as lower interest rates drove an increase in MSR runoff of almost 80% versus prior year levels. Our presentation of adjusted pre-tax income now reflects MSR runoff based on actual servicing UPV runoff, and all changes due to rates, inputs, and assumptions are classified as notables. We believe this approach is consistent with certain of our peers and addresses feedback from investors. Let's turn to slide 5 to discuss the actions we're taking that we believe will improve long-term ROE performance. We are taking focused and deliberate actions to improve ROE long-term that we organize into three categories. Servicing scale, portfolio optimization, and technology-driven productivity. Regarding scale, every $50 billion in servicing can reduce fixed costs per loan by 13%. We could use to target a roughly 50-50 mix of own servicing and subservicing to grow our portfolio on a capital-efficient basis, as well as balance EPS growth and ROE. Our organic growth strategy, focused on delivering positive outcomes for customers, has driven steady servicing portfolio growth. Next is optimizing our own servicing and subservicing portfolios. We've reduced our investment in reverse MSRs because yields are two percentage points lower than forward, and they're not easily leveraged, and they have a higher relative volatility. We are leveraging machine learning using client, asset, and consumer data to identify what we believe are the most profitable MSRs to focus our origination activities and improve returns. In subservicing, we've largely exited the rhythm of servicing and are growing in commercial and reverse, which is more profitable and requires specialized skills and systems, which we have. Finally, technology during productivity has been a foundational element of our strategy embedded in our business culture. We've significantly reduced expenses since the acquisition of PHH while delivering servicing portfolio growth, and building a top 10 non-bank originations platform from scratch. Robotic process automation, intelligent document processing and natural language processing have reduced manual effort as well as transformed document management and customer engagement. Future investments are focused on driving additional productivity, improving recapture and enhancing the customer experience. Let's turn to slide 6 to review what I believe differentiates Onity from our peers. We've built a strong foundation and a growing, customer-focused business by consistently delivering positive and differentiated outcomes for our customers. We're a top 10 non-bank originator, servicer, and subservicer with a balanced and resilient business built to perform through business cycles. Our award-winning, technology-enabled platform has been recognized as a top-tier servicer by Fannie Mae, Freddie Mac, and HUD for five consecutive years. Our platform delivers superior operating outcomes for our customers, which when combined with our enterprise sales model, expansive product suite, and diverse capabilities, fuels meaningful portfolio growth. We've built a strong foundation by shedding on profitable assets and relationships Investing in talent and technology and building trust with clients by delivering a positive experience and targeted solutions that create measurable value. We're now growing from a position of strength with a more focused and simplified business with increased strategic flexibility. Let's turn to slide seven to review our balanced business model. While there may be variability in any given quarter due to evolving market dynamics, our balanced business continues to demonstrate long-term resiliency to changes in interest rates. The complementary profitability dynamics of origination and servicing balance each other as interest rates have declined in the 12 months ended the second quarter of 2026 versus the 12 months ended the second quarter of 2025. And with interest rates increasing in the second quarter, Servicing adjusted pre-tax income has improved, offsetting declining origination income. We continuously optimize operations capacity and scalability, as well as our MSR investment profile, to enable our balanced business model to operate as intended through interest rate cycles. Let's turn to slide 8 for more about our growth focus and actions. Our enterprise sales approach and focus on delivering value for clients is producing terrific results. In the second quarter, our originations grew 64% versus prior year, outpacing industry volume growth and achieving record levels since we built our platform. We've improved our refinance recapture rate to 51% in the second quarter, up 3 percentage points versus the prior year, with a roughly three times increase in refinance payoff volume. Our recapture performance has continued to exceed the ICE industry average for the last 12 months, and we believe we're delivering top-tier recapture performance versus our third-party origination-centric peers. With mortgage interest rates increasing, we've seen a doubling of home equity product volume versus the second quarter of last year. We believe this is a valuable product for consumers and one that helps us manage operating capacity and improve customer retention. As a reminder, we do not include home equity volume in our refinance recapture rates. Our Rich Nations team is performing very well, and we're continuing to invest in technology and process optimization to enhance the customer experience, reduce costs, and improve scalability and competitiveness. Let's turn to slide 9 to see what we're working on. We're embedding AI, analytics, and automation across our lending platform to improve our recapture rate by increasing capacity and improving human performance. We are using voice agents to support customer communication across several aspects of the lending and servicing process. Voice agents create historically unparalleled capacity to engage borrowers seeking to refinance or access their home equity and generate actionable leads for our sales team. This is driving improved connectivity with customers and increasing engagement, which in turn drives increased blocks and fundings. AI call monitoring analytics provide insights to optimize marketing, improve opportunity identification, fine-tune value propositions, and improve sales performance. Real-time agentic AI integration through our partnership with Glen is aimed at optimizing customer and employee workflows and providing a faster, more guided experience. Technology allows us to turn interactions, bar signals, and workflow events into intelligence that drives superior recap performance and customer experience. It's clear that our investments are delivering tangible results, and we remain excited about the future potential of our investment pipelines. Let's turn to slide 10 to discuss subservicing. The disruption created by industry consolidation among subservicers continues to create opportunities. We are winning new clients with strong platform performance and a compelling value proposition. First Lab's subservicing additions of $35 billion exceeded our guidance with key wins with capital partners, banks, and independent mortgage banks and we continue to have an active opportunity pipeline across all three segments. We're excited about the growth we're seeing in business purpose residential and commercial subservicing driven by our expanded product offerings. UPB is up 25% versus prior year and we were renamed a servicer on our first single family rental securitization for a top tier client in that space. We continue to invest in technology to improve transparency, increase term times and Client Service Service Functionality. Our efforts are yielding results as evidenced by our Client Net Promoter Score of 70 in the first half of 2026, a level rivaling some of the best service organizations. Let's turn to slide 11 to talk about how we've grown our servicing portfolio. Total servicing UPV ended the quarter up 10% year over year versus total industry servicing growth of 3% with growth in both owned MSR and subservicing. Year-over-year servicing addition, net of runoff of $76 billion was largely driven by organic growth and more than offset plant transfers to rhythm and other client asset sale-driven deportings. With MSR demand keeping, prices elevated, we continue to see clients monetize their older MSRs while replenishing their portfolio with new originations. There should be no question as to our ability to compete for business and grow our servicing portfolio. Our double-digit portfolio growth, despite the rhythm transfer and client MSR sales, highlights the strength of our value proposition and the power of our rich nation capability. Now, I'll turn it over to Sean to discuss our financial results in more detail.